NEW YORK CITY-Partnering up to originate and purchase commercial real estate debt assets, fund manager Hudson Realty Capital LLC and owner/manager RXR Realty LLC are working together on a new lending platform. The two companies will focus on first-mortgage bridge loans, as well as B notes, mezzanine and preferred equity opportunities in Manhattan, the city’s outer-boroughs, southern Connecticut and Westchester County.
Spencer Garfield, managing director at Hudson, tells GlobeSt.com that joint venture will generally target loans or investments in the amounts between $10 million and $50 million throughout the capital stack -- an area that both companies believe is a significantly underserved segment of the market, particularly for value-add investments, as well as recapitalizations.
“It gets us both into a space that we otherwise wouldn’t be in,” he says, noting that Hudson will have access to a larger playing field. “We’d definitely make investments in the $5 million to $35 million range. We are generally a senior bridge lender. This venture will enable us to get into much larger capital stacks in subordinate positions. For RXR, it allows them to get into the debt space.”
The JV will participate in most property types, including office, multifamily, retail, industrial, mixed-use and self-storage. Garfield says both Hudson and RXR will originate, but Hudson will do the underwriting. When finalizing a transaction, the committee and approvals process will be a joint Hudson and RXR process.
“Hudson will asset manage, but depending on the nature of the transaction, whether it has a construction component, then we will bring in the expertise of RXR as well,” he adds.
RXR, which owns interests in and manages more than 17 million square feet of property in New York City and the surrounding Tri-State Area, recently purchased the Starrett-Lehigh Building in West Chelsea for $920 million. The firm has also acquired 1330 Avenue of the Americas in Midtown and Flatiron trophy, 620 Avenue of the Americas.
Hudson manages more than $2 billion in real estate assets and focuses on originating, underwriting and servicing real estate loans.
In a statement, Michael Maturo, president of RXR, says its partnership with Hudson is a “natural extension” of the company’s real estate investment platform.
“We have been active acquirers and originators of large structured finance investments in the past, but have passed on many attractive smaller deals that were not efficient for us to transact,” he says. “This platform will combine the benefits of our long-standing presence and relationships in the New York Tri-State markets with Hudson’s origination and servicing skill set.”
Hudson and RXR have known each other for over 15 years – and now, are finally working together as partners.
“People have asked why RXR and Hudson, and we’ve been friends with RXR and have had respect for them,” Garfield says. “It’s something we discussed for many years and we felt the timing was right.”
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